SOE cloud over Sunshine Palace
Less than five months after opening as the fourth cinema in the Palace Amusement chain, the early performance of Sunshine Palace has been clouded by security measures imposed to contain and deter crime.
The 674-seat facility at the Sunshine Outlet Mall in Portmore, St Catherine, is outfitted with digital laser projection and is Palace’s largest theatre. And while company Chairman Douglas Graham has not said so officially, the Financial Gleaner understands that the facility was done at a cost of $400 million.
Douglas says the capital expenditure was funded from company resources, the replenishment of which is now weighing on his mind, given the present lack of moviegoers.
“To have done that without the bank is quite painful, and if it started like a rocket then that would have okay. But it started and then floundered, and that is what we are suffering now,” Graham told the Financial Gleaner after the conclusion of the company’s annual general meeting on Tuesday.
He blames the lack of patronage on the parish-wide state of emergency, SOE, declared for St Catherine to curb lawlessness in its violent communities. The measures curtail opening hours for business and people movement after certain hours of the night.
Graham says the theatre was doing good business after its July 24 opening, but that customer traffic trailed off after the SOE was declared in September.
“Once the SOE is in place we will be half-asleep, because it shuts us down early in the evening,” he said.
“Right now they say we must be off the streets by 11 p.m., therefore neither our staff nor the public can be in the theatre at that time. They have to be out by 10:30 p.m. That means we have to start the movie at 8 p.m. and that is way too early for Portmore,” Graham said, adding that his pleadings of lost revenue are falling on deaf ears.
“They have shoved us into an unprofitable show time, and that’s the one thing in our way. We can make the appeal, but I don’t get the feeling that anyone is listening,” he said.
Palace, which also operates Carib Cinema and Palace Cineplex in Kingston, and Palace Multiplex in Montego Bay, has been having a good run at its cinemas in recent times.
The market has rewarded the stock, which is now the most expensive on the Jamaica Stock Exchange at $2,900 per share. That’s nearly 15 times the $200 price it was trading at in the first quarter of 2017. And that’s despite the fact that Palace is one of the most illiquid stocks on the exchange. The 1.43 million units in issue are tightly held, the stock sometimes does not trade for weeks or months, and when it does, the volumes tend to be thin, within a band of 100 to 200 units.
In 2018, when the stock crossed the $1,000 mark, the world-popular Black Panther movie was said to be the biggest driver of earnings for the company that year. Palace also marked a new milestone when revenue topped $1 billion for the first time. Those inflows were largely sustained the following year, but the company saw a slight dip in sales from $1.16 billion to $1.11 billion at year ending June 2019.
Still, Palace said in the accompanying statements to its earnings report that the near five per cent fall-off “was not considered discouraging”.
Profit also fell from nearly $130 million in 2018 to $79 million at year ending June 2019.
The September first quarter was a positive start to its current fiscal period, with revenue gaining $100 million to $370 million, and profit nearly doubling, from $9.9 million to $18 million.
Graham says as long as movie-makers continue churning out hits, he expects Palace to do well.
“What they produce, we show; so we have no idea before the production is complete as to whether it is going to be suitable for us. Like the rest of the world, we tend to have similarly good taste, so great pictures do well here but at the same time we tend to be different,” he said.
Regarding the impact of home movies provided by the likes of Netflix, Graham is unfazed. He says while they take a bite out of revenues, and that side of the market appears to be growing, the impact was not significant at this time.